• Technical pullback occurs after EUR/JPY touched 169.72 - its highest level since July 2024

• Japanese Yen gains momentum as traders price in potential BoJ policy shift

• Geopolitical developments provide mixed signals for currency markets

The How does Solana make moneyEUR/JPY cross witnessed notable selling pressure during Tuesday's European session, retreating to 168.10 after three consecutive days of gains. This movement represents a 0.9% decline from Monday's peak at 169.72, which marked the pair's strongest valuation in nearly a year.

Market participants attribute the JPY's resurgence to growing consensus that the Bank of Japan may accelerate monetary policy normalization. Recent inflation data revealed Japan's core CPI reached 2.3% year-over-year in May - exceeding the central bank's target for the 16th consecutive month. Concurrently, preliminary PMI readings showed Japan's manufacturing sector expanding at its fastest pace since November 2023.

Economists highlight that rising service sector prices and sustained wage growth are creating conditions for potential BoJ action. "The combination of sticky inflation and improving economic indicators makes a strong case for policy adjustment," noted Tokyo-based strategist Haruto Yamamoto. "Markets are now pricing in 60% probability of a 15bps hike by September."

On the Euro front, the single currency found modest support from reduced geopolitical tensions. The Israel-Iran ceasefire agreement, though fragile, contributed to improved risk sentiment across European markets. Germany's IFO business climate index outperformed expectations, climbing to 88.4 in June - its third consecutive monthly improvement.

Technical analysts observe that EUR/JPY remains within its established uptrend channel despite the recent pullback. "The 167.50 level represents critical support," commented FX technician Lisa Weber. "A sustained break below could signal deeper correction toward 165.80, while holding above maintains the bullish structure."

Upcoming economic events that could influence the pair include Thursday's Eurozone CPI flash estimate and Friday's Tokyo CPI release. Additionally, market participants await clarity on US-Japan trade negotiations ahead of the July tariff deadline.